Goldman Sachs Under Purview For Alleged Role in Failed SVB Deal

Sahana Kiran
Source – TechStory

The U.S. banking system has been under constant stress in 2023. The downfall of several prominent banks caused commotion across the world. The collapse of the Silicon Valley Bank [SVB], in particular, started trouble for other financial institutions as well. Now, months following the SVB crash, Goldman Sachs Group is being investigated by the U.S. government.

In March 2023, SVB sold a portfolio worth $24 billion to Goldman Sachs at a loss. Following this, the bank sought Goldman’s assistance in raising over $2.2 billion to make up for the shortfall. However, Goldman Sachs was unable to complete the deal which ultimately led to the failure of the bank.

This caused several rival banks and other financial entities to call out Goldman Sachs for failing to secure capital beforehand and instead causing panic in the market. The failed transaction went on to cause significant disruption in the U.S. regional banking system. As a result, U.S. government agencies are currently reviewing Goldman Sachs’ role in the deal.

Goldman has been cooperating with the investigation

A group of 20 Democratic House members from California, led by Senate candidate, Adam Schiff, have urged the Justice Department, the Securities and Exchange Commission, and the Federal Deposit Insurance Corp. to investigate Goldman Sachs’ role in the downfall of SVB.

The lawmakers have been yearning for a federal investigation to look into whether the New York-based firm had any involvement in the failed bank and to include the firm in the preliminary investigations.

Additionally, it is unsure if the government would deem the bank to be responsible for the downfall. Nevertheless, Goldman Sachs is reportedly cooperating with the government by delivering details that are pertinent to the investigations into SVB. This includes their involvement in the failed deal in March, further stated in a regulatory filing made by the firm.